Written By:
all_your_base - Date published:
1:32 pm, December 8th, 2008 - 34 comments
Categories: International, workers' rights -
Tags: argentina, klein, lewis
Naomi Klein and Avi Lewis describe in the New Statesman how:
[a]lmost entirely under the media radar, workers in Argentina have been responding to rampant unemployment and capital flight by taking over businesses that have gone bankrupt and reopening them under democratic worker management.
The current rise of populism challenges the way we think about people’s relationship to the economy.We seem to be entering an era of populism, in which leadership in a democracy is based on preferences of the population which do not seem entirely rational nor serving their longer interests. ...
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The Documentary about this has been on Documentary Channel.
That’ll be The Take.
http://www.thetake.org/
Republic Windows & Doors Factory in Chicago has just been occupied. While the workers are saying their occupation is all about getting $1.5 million owing in severence and holiday pay paid, it is not a major step from where they are to assuming full control of the factory and resuming production.
The story is here. http://www.zcommunications.org/znet/viewArticle/19870
I’ve often wondered why,when a NZ factory is closing the union/employees don’t put forward a ‘takeover/ buyout’ option, rather than simply taking their redundancy and walking.
As I’ve said in other comments, the legal structures exist for this to happen in NZ. Maybe as the general situation becomes more desperate in the coming year or two, such proposals will be formulated?
Sounds proactive to me. Excellent. Provided they are not taken by force and etc etc.
I too have always wondered why the workers just walk away when the factory doors are closed. Surely they can do just what these people have done. I’m sure it would be hard but ffs aint no free lunchboxes in thsi world.
Bill – the legal structure that would be most apt in this circumstance is: (1) forming a limited liability company; and (2) making and offer to buy the business. It doesn’t need anything more – the vendor will always accept a credible higher offer on substantially the same terms.
Not sure there are any legal impediments at all to workers buying their business before it fails completely, so why doesn’t it happen?
One reason could be that workers don’t want to be exposed to the many risks that come with business ownership including the risk that you might never, ever get paid. This risk is particularly great when the business is failing. Alternatively, perhaps some workers feel they have a different skill-set and simply aren’t confident enough to take on that job…?
No need to re-invent the wheel. The mechanism for “self-control” by the workers is there – in most cases they see benefit in ignoring it and working for a more secure hourly wage than an “at risk” share of profits.
That’s called “capitalism”.
Or perhaps they lack the capital.
Exactly what factory are we talking about where the workers have enough to scrape together a couple of hundred thousand to a million on top of mortgage payments etc??
Since the company has been most likely run into the ground, is this a wise move? Where are you going to find the capatal to reinvest on top of this? (assuming the factory is not up the duff from other creditors also.)
Who is going to run it and how?
Having said all of the above: What an awesome and empowering idea. A true revolution.
OMG Carlos Menen did what Key wants to do. We’re fucked now Bwaahahaha
Good on the morons who put him in. If foreseeing something like this wasn’t scary enough then put it in place and find out.
You can watch the documentary here riots and all!
You may need to click on CC for caption options
BTW the IMF sucks!!!!!
Tane and Magoo – yes the workers might lack capital, but if profits are such a sure thing, surely a bank will give it to them…?
Magoo – it IS an awesome and empowering idea. Like I said, it’s called “capitalism”. There is TOTAL freedom for workers to club together their savings, form a company so that their losses are limited to what they initially put in, convince a bank they have the necessary skills to return the business to profitability and borrow the rest of the purchase price.
There are no barriers to this happening right now, but it does not happen because some people do not want to take on the extra risk of business ownership (which, all things being equal, means they are less likely to ever get the extra rewards of profitable business ownership either).
Jimbo
The legal structures I was referring to are such as to allow or facilitate the setting up of a limited company without a vertical division of labour. (otherwise there is simply a change of boss rather than self management)
On matters such as lack of capital, ongoing viability of the business and the will of workers to commit to such an undertaking; these are all variables which would presumably be explored in a feasibility study before any takeover proposal was tabled.
And I’m sure that there are many situations where the idea of worker’s self management would be a ‘no go’, for a variety of practical as well as ideological reasons.
But I have never heard the idea being raised at all in situations of closure. Which leads me to suspect that although there would have been situations where worker control would have been viable and maybe even desirable, the possibility is never seriously explored let alone discussed because such ideas ‘do not exist’ in the collective social concious of NZ.
It was in recognition of that fact that in my original comment I said that such proposals may begin to surface as the general situation worsens. This was the case in Argentina. Factories and hotels were not taken over by workers acting from ideology, but in desperation.
The question can still be asked as to why NZ unions and others do not take the opportunity to get ahead of the game and explore such scenarios now in preparation for when such ideas will gain traction….introduce the concept now so that it becomes gradually acceptable as a possible course of action rather than some left field ‘way out there’ proposal that gets instantly dismissed as loony because nothing like it has ever been heard before.
yes the workers might lack capital, but if profits are such a sure thing, surely a bank will give it to them ?
What bank is going to give a bunch of factory workers $100 million to buy the business they work for? Do you honestly think the redundant Feltex workers were in a position to go to the bank and ask for a loan to buy the company?
What bank is going to give a bunch of factory workers $100 million to buy the business they work for? Do you honestly think the redundant Feltex workers were in a position to go to the bank and ask for a loan to buy the company?
So Feltex was not a fruit for the plucking.
But what about the small to medium sized factories that used to produce shoes and clothes? What about wholesale distribution centres or medium sized print companies; cafes, bars and restaurants?
At the end of the day I’d guess that banks would rather recover money than write it off. So if a business proposal would recover them their money and also put workers collectively in control of their own workplace….
It wont fly every time. $100 million is a lot of money for 100(?) workers to borrow. But lets say they got the 100 million. Their troubles are only just starting because there is no tradition in NZ of collectives and therefore nowhere to learn from in terms of avoiding the potential pitfalls of collective management. Nowhere to turn to ‘import’ tried and tested systems. No advice based on experience. No previous experience that would allow you to identify danger signs that might be signalling a slow default back to ‘traditional’ managerial practices.
So it would be extremely difficult. But possible. And the difficulties could be ameliorated to some extent if the labour movement explored the issues and possibilities now
Of course the reality is that every situation should live and die by its own merits.
Having said this (there are a lot of me having said stuff) there are a few fundamentals that will apply to most factory-type situations:
– The workers will generally not be highly paid and thus not be in the position to contribute much. The only viable scenario is people using their own personal assets for collatoral.
– The idea of “only losing what you put in” is kind of ridiculous for an low-average worker. What you put in would be “everything” for this to even be possible.
– The company is already in trouble and is going bankrupt and thus it is a bit of a stretch to expect banks/lenders to leap at this opportunity! (current lending climate ignored of course)
– If the company is in such a unique situation where it can be insolvent while somehow retaining enough credibility to be finance-worthy (e.g. assets), the workers would be competing against other businessmen in the fire sale most likely.
– Even if you got money loaned to support this, the interest would be prohibitive and further compound the problems above.
The only way I can see this being a viable consideration in 99% of cases is if the government greased the wheels in terms of legislation and bankrupcy procedure to give special consideration to this situation.
This would apply to companies who have become insolvent to mostly the workers and are asset rich OR do not require a cash injection to keep trading. (workers may take “pay shortfalls” in equity)
Arbitors of the bankruptcy (mind blank on their title just now!) would have to be directed by govt. in this case.
One issue that must be resolved is bad businesses using trusts and limited liability to defraud. I understand the intent of the legislation but the way in which it is exploited is a blot on business ethics (if that’s not considered oxymoronic on this site).
I’m not opposed to it in principle – you couldn’t run Telecom as a partnership for example. However, their needs to be greater penalties for business operators who benefit from hiding behind trusts and limited liability at the expense of other businesses and workers.
Heck – I’m half way to buying a ticket to Argentina now!
What bank is going to give a bunch of factory workers $100 million to buy the business they work for?
If a company is bankrupt, it’s net asset position is most likely (and I’ll type this slowly so you can keep up, Tane and Mr Magoo) zero…. dollars… and… zero… cents.
It would require marginal additional borrowing/capital to take ownership of the organisation as a whole. Most of what you see when huge sums of money are exchanged for bankrupt companies is the new owner paying not to take on the company’s existing debt. Of course, there is a difference between going ‘bankrupt’ and running out of liquidity, which produces very likelyhoods for employees to step in and run the show.
Like Daveski and others have said, I think this is a fantastic idea. It’s interesting that the only people who seem to be saying “can’t be done” and “it’s too hard” are some of the left leaning commentators – where’s your collective spirit when push comes to shove?
🙂
Bill and Magoo – agree that workers’ buying the business is more likely the smaller the business is. The legal and financing costs for a large acquisition are simply too high for workers (even when banding together) to contemplate. Large targets need large and experienced purchasers with deep pockets to fund the acquisition costs.
Right now, the workers of GM could (if they can get finance and if they’re prepared to spend millions on legal fees), buy the business. They would have to do exactly the same things that any other potential purchaser of GM needs to do. There’s no reason to “change” the system to give the workers some sort of advantage over other purchasers – in fact, there are good arguments why doing so would be very bad.
Tane – no I don’t think banks would lend workers the money in situations like Feltex. Why lend the money to workers who cannot (or refuse to) put up any equity and who are untested in big business management? It doesn’t stack up and changing the law somehow won’t male it stack up! I don’t ever want the government to start “underwriting” this structure because I don’t think it would be good for society in the long run.
From a politics perspective, what would be the value of “making it easier” for workers to buy their businesses? Not much, it seems: If the business is truly able to survive profitably, a purchaser (and financiers) should emerge to take it over and run it. If the business cannot be run profitably, why encourage risk-taking by the workers?
There will always be examples of workers taking over businesses and doing well. I doubt it will ever prove to be the norm, though. This is not because workers cannot do it or are incapable, but because they usually do not have sources of lending, usually do not have a track record in business acquisition or management, and usually do not have the will to take on the “all-or-nothing” risk that comes with owning a business.
The reason that workers don’t normally occupy workplaces when they close is that they think they are assets owned by their employers and so its the right of the employer to decide what will happen with those assets.
If they understood that the value of the assets of their employers are the result of their past and current labour, then the question of who actually owns the workplaces is opened up.
In Venezuela where workers are beginning to see their workplaces as owing them at least the right to continue working them, occupations are much more likely to lead towards a significant change in society than what we have seen in Argentina.
In Argentina the movement has gone into limbo as the economy has picked up. This was true even when The Take was filmed in 2004 I think. But in Venezuela some strategic industries around the oil industry and steel have been taken over and have been ‘nationalised’ and run by workers in coordination with the state. Typically the state compensates the owner for the current market value of the company assets.
But even here, most workers do not see that the value of the assets is the product of their past labour otherwise there would be widespread demands for nationalisation with no compensation to the private owner and under full not partial workers control.
No doubt the current crisis will push workers towards thinking along these lines when they see their wages and future taxes being mortgaged to bail out parasitic bankers who far from creating value have destroyed trillions of value including the value of millions of workers homes, and already more and more jobs. The Chicago occupation is an important rallying point to get this message across.
Good on them. It should be very heartening to anyone on the true left.
Others see co-operativism, the legal form chosen by the vast majority of the recovered companies, as a capitulation in itself – insisting that only full national isation by the state can bring worker democracy into a broader socialist project.
Those insisting that state nationalisations as the only way to bring workers democracy are wolves in sheep’s clothing. It’s just leninist, trotskyist bullshit. That kind of thinking is the enemy of socialism. True worker’s democracy will never be got through a red bureaucracy. As Bakunin said and as was borne out by history “this will only lead to the worst of all despotic governments”. I think libertarian socialist ideals will and are gaining currency again. For instance, I see that anarchism has actually been mentioned in the news today as the anarchists are rioting in Athens after the killing of a teenager by police.
Privatisation, deregulation, labour flexibility: these were the tools to facilitate a massive transfer of public wealth to private hands, not to mention private debts to the public purse.
Sounds exactly like another country I know….
In an environment where a number of collectives already operated the possibility of inter-lending would exist. And expertise would be available to help overcome short term deficits in skills and experience.
Collectives and co-operatives tend to aid one another rather than compete. (For example Suma, Green City and Highland Wholefoods operate in the same sector but do not compete over market share or territory and Suma gave a low or no interest loan enabling a collective to launch in a separate industry. Medium/long term these two entities traded to each other on very favourable terms. A win/win situation for both sets of workers.)
As collectives become more numerous it would be possible to by-pass the traditional banking sector to a greater or lesser degree; maybe even completely.
Meanwhile, although there is no ‘collective movement’ (for want of a better term) in existence here in NZ., there is overseas. It all started from scratch and, if I think about it (contradicting some of what I have said previously), it would not be necesary to ‘reinvent the wheel’ in a NZ context thanks to the communication afforded us by the internet.
How internationalist are the collective presences abroad? Dunno. Would they be willing to offer advise and guidance? No doubt. Financial backing? Dunno. There may well be some common fund set up by them for that very purpose.
A world of possibilities.
Rave – sorry, I think you’re talking nonsense. Total, unsupportable, discredited, tired, nonsense.
It IS the right of the employer to decide what happens to the assets if the employer is the owner of the assets. It is also open to workers to offer to buy those assets from the employer at a fair market price – NOTHING stops them from doing so and no rational employer (or receiver in the case of insolvency) will reject the offer.
Workers already have the right to own, accumulate, buy, sell, lease and borrow assets. Each and every one of us is legally entitled to quit our jobs tomorrow and start a business.
If you’re earing $20 an hour but you believe your labour is “undervalued”…?, then go and start a business – you’ll get the FULL value of your time and you’ll own the business assets (but you’ll also expose yourself to the possibility of earning nothing and/or losing all of your initial investment).
RISK reaps the reward, not some bollux about having “contributed to” the success of the business while you sat back and enjoyed a risk-free hourly wage…
You seem from your post to want “widespread demands for nationalisation with no compensation to the private owner and under full not partial workers control.” Frankly, if you are genuinely waiving the banner in support of a communist economy, that puts you so far out on the extremes of the political spectrum that I’m at a loss for how to sensibly respond! I don’t know how communism has improved since its previous disasterous incarnations in Europe and elsewhere – perhaps the magic pixies will make it work in NZ, huh?
I don’t want to be mistaken – I’m all for workers seizing the means of production in a failing business or, where possible, purchasing it the proper legal way. I just don’t hold out much hope that purchasing it is a plausible option. Happy to be proven wrong.
I don’t know how communism has improved since its previous disasterous incarnations in Europe and elsewhere – perhaps the magic pixies will make it work in NZ, huh?
First of all I’ll say that I’m not a communist that much should be clear from my previous comment. That fact that you think bolshevism was communism in practise evidences you as an ignorant fool. The bolshiviks exploited the revolution in Russia to their own ends. The bolsheviks did not enact marxism (by which I mean communism) they merely exploited revolutionary sentiment and enacted their imminently despisable government. Many marxists criticised them at the time and many of Marx’s contemporaries on the left criticised Marx in his time. Your argument to the bolsheviks or some other despicable regime in the last century is a perverse argument made to stultify discussion much like comparisons to nazism. It is often heard from those on the right and would be as idiotic as me pointing to the nazis everytime you made a point in favour of your political views. Furthermore, what has been the great success of modern capitalism? Massive inequality, poverty, unemployment, mass apathy, environmental degradation, cultural monism… what? I think there are many comparisons to draw between bolshevism and corporatism today, the mangerial nature, technocrats, and despotic tendencies. Lenin said that the workers must “unquestioningly obey the single will of the leaders of the process” which sounds exacly like today’s corporatism to me.
Jimbo:
How come workers expropriating bosses is out of order, yet bosses can force taxpayers to underwrite their failed businesses and workers go quietly into the carpark when the plants shut down?
I think youll find that the occupation in Chicago (which interestingly involves a mainly Latino workforce) and those in Latin America show that once workers realise that they are the one’s who run the factory (as opposed to the boss running off with his bonus, while owing everyone else) they can think for themselves what ‘socialism’ can be.
When Obama turns up a says the workers in Chicago are justified in demanding to be paid redundancy and other entitlements, this is virtually saying to every other worker who is laid off when plants close down – Take It, Of course Obama isnt actually saying this because he’s worried that workers might actually “take” their workplaces – he wants a ‘fair negotiated’ solution and of course a proper bailout for the Detroit “big 3″.
However as the crisis builds, more workers are as Bill says likely to begin questioning what kind of system is it that craps all over them, and they are supposed to sing as Jimbo says
” For we are lazy bastards and that’s alright” or listen to QtR who pointing to the Google map says “comrades, remember this is Greece not Leningrad”.
Fortunately, capitalism doesnt follow the cockeyed drivel of the Standardista commentariat, and has certain dictates, and when workers en masse “have nothing to lose” as one Chicago workers said, Main street is gonna rise up and blow Obama off.
If a company is bankrupt, it’s net asset position is most likely (and I’ll type this slowly so you can keep up, Tane and Mr Magoo) zero . dollars and zero cents.
Phil:
Apart from attempting to be patronising and insulting, you are also wrong and missed my point entirely.
I will type this slowly so you can keep up.
If the debt, as in the case in the example provided, is mostly to the worker’s (i.e. payroll) then it is quite possible that the company is “asset rich” and that what makes it insolvent is solely the debt to the workers. Their debt is used to obtain the company and thus wiped from the books and would leave the company in a positive cash flow position.
I really wish you would try to keep up.
Caveat: One of my other main points was that this is a somewhat idealistic situation, but not impossible. The article does mention that the number of companies this has happened to is small, but not insignificant. Argentina probably has a lot more factories than we do that would fit this situation.
However, one can imagine a number of situations where the workers act to create this situation. (future reduced pay, personal investment, private backers)
Tane. “I just don’t hold out much hope that purchasing it is a plausible option.”
It was a hairsbreadth away from happening here a couple of years back when a local venue was going under. What scuppered the deal was back room shenanigans by one of the then current bosses.
But even putting that aside, it’s still pertinent to ask why workers will use redundancy payments to launch their own business, perpetuating the inequity of orthodox business culture but never, as far as I’m aware, come together and form collectives.
I guess part of the reason is that there’s a blind spot to the very possibility. When light is shone on the possibility there are a lot of very negative assumptions borne, it seems, of ingrained propaganda and ignorance. (There is an assumption that such a scenario will lead to the individual being disempowered and somehow ‘ripped-off’…you might say it’s the result of residual anti-communist propaganda swaying peoples’ perceptions?)
Whatever the reason, it’s odd in my mind as to why NZ has proven to be barren ground for such endeavours when the experience in other similar cultures/countries is so different.
Back to the part unions can play. During redundancy, unions elevate the welfare of their members affected by the process. Shouldn’t part of that concern be expressed by introducing them to such possibilities…encouraging the formation of un-orthodox business models that dispense with the vertical division of labour?
I can understand this not happening in the past when unions ( overstating here) were the preserve of Leninists and their ilk; idealists whose aim would have had more to do with control than emancipation. But those days are gone (thankfully) and in todays more pragmatic environment it seems to me a no brainer that workers should at the very least be presented with an avenue leading away from the disempowering culture inherent to business orthodoxy.
In a case of shut down, explore the possibility of a takeover. If not feasable, offer the knowledge that would allow redundant workers to create more humane work environments for themselves. There is nothing lost in such an approach ( should the overtures be rejected ) and the possibility of marked gains if workers picked up the ball and ran with it.
MrMagoo,
The Klein article talks about the company being bankrupt. Your own comment is; The company is already in trouble and is going bankrupt
Bankruptcy is one subset of a wider definition of insolvent – which includes having the net assets, but being illiquid and unable to pay debts as they fall due.
Think Enron (bankrupt) vs NZ finance companies currently in moratorium (illiquid).
If you want to argue the wider definition, fine – I fully accept that some cases of insolvency will not produce an open avenue for worker initiated ownership. But, don’t blame me if Klein can’t get her definitions right.
Phil:
I am going to give up on this now because it is not productive.
The scenario described is that a company is bankrupt because it is not able to meet payroll.
My many-pointed discussion was around in what scenario it would make sense for workers in NZ to assume ownsership of the company.
One of those scenarios is that the workers are the primary debtors and thus clear (by whatever means) this debt. If this is acheived the company may be able to continue to trade and effectively be solvent again after this transition.
This is an unusual situation.
This disagreement highlights another of my points: This transition would be difficult to impossible without some form of government help.
Whether this was via legislation or by including such a directive in bankruptcy procedures I am not sure. Perhaps such a provision is possible but would most certainly be complicated if other debtors were involved and did not like the idea.
Fortunately, I am not an expert on bankruptcy laws! 🙂 So my speculations will have to stop here.
Mr Magoo,
Picking up on one point…
This transition would be difficult to impossible without some form of government help.
Why involve a government legislative programme when a union could do it?
Why involve a government legislative programme when a union could do it?
Could not say to be honest. I am not an expert on this.
Debtors are not well known to assume ownership of companies that owe them money as far as I know? Why is this? Possibly what I am talking about.
What I do know is that the bankruptcy proceedings are overseen by an independant third party who decides what happens in the best interests of the people concerned. Perhaps all that is required is that this person has guidelines created for workers assuming control of a company?
Horribly complex at any rate.
Quoth the Raven – I’ll happily admit my economic history isn’t anywhere near yours. Your reckon that makes me an ignorant fool.
I reckon anyone who calls for “nationalisation with no compensation to the private owner and under full not partial workers control” needs their head read and hasn’t moved on from university textbooks and Che Guevara T-shirts to the real world. I guess that makes us even.
The success of capitalism is all around you. Is the Chinese economic miracle something you’ve missed…? Some personal property rights and incentives to build businesses and accumulate capital has done more for the Chinese peasant than decades of or planned economic management.
(And yes, I know that China claims not to be capitalist – but it’s growth in the last 20 years is entirely down to China adopting capitalist practises and rejoining the international market economy.)
Rave – frankly I don’t think business owners *can* force governments to bail them out in the ordinary course of things. Governments have decided to do so recently in response to unprecedented circumstances so as to prevent more widespread damage to the system. It’s certainly not normal that a business owner is personally underwritten by the Government – and that’s not really what’s happened here. In the US and elsewhere, governments have decided an orderly wind-down of certain businesses (and industries) is more important than remaining idealogically faithful (i.e. the business should fail if it cannot generate profit). In my view, this is mostly driven by a desire to help the most needy – i.e. the workers at those businesses – and is a good thing.
I am delighted if workers chose to organise and acquire businesses. But what are you guys asking for – ownership without risk…? It doesn’t exist (as recent world events have proved)!
And yes, I know that China claims not to be capitalist – but it’s growth in the last 20 years is entirely down to China adopting capitalist practises and rejoining the international market economy.)
One of the fascinating quirks of Chinese political history (viewed from the outside) is that the Tianamen square protests are considered a great uprising of freedom and individual expression, a catalyst for market reform and the opening of China to the world.
In reality, the complete opposite is the case.
The Chinese authorities had already begun market reforms. Those reforms (as all tend to do) disproportionately impacted those that live in cites and/or are poor.
Who fits into that group? Students. More than anything else, T Sq was a protest against the market economy.
Jimbo – Yes, I was a little harsh. It’s just a really annoying argument. I wish those on the right would know a bit more about the left that’s all. There’s many more alternatives aside from free markets, state captialism or state socialism. On to the issue of China; let me ask you would you want to be a worker in China? China’s a great oppurtunity for the corporates of the west. They can export the jobs, done by their pampered western workers, who fought through popular struggle to gain what little rights they do have, and get cheap workers with little protection in China (as well as many other countries such as India and Mexico). This undermines western worker’s wages and allows the corporates to say “see your unions and regulations are strangling business, you’ve done this to yourself.” It’s equivalent to someone grabbing your arm and hitting you with it and saying “stop hitting yourself, stop hitting yourself”. I don’t know a lot about recent Chinese history, but I feel something could be said on peasantry, urbanisation, industrialisation rather than just free-market reforms. Things are always more complex than the simple black and white pictures those on the right wish to paint. I will make the point that, as with Russia, there is nothing to enamour one to the older state of play in China and it was also bad for workers and their freedom. You pointed to China as an example of captialism’s success, but you may well have pointed to Chile (not so much now with a shift to the left), Belize, Brasil (a very rich country, but you wouldn’t think so when you see the slums), etc.
Yes. The Chinese miracle. And with the western world falling around its own ears, they will be more than happy to bring their version of capatalism to us as a merry xmas present.
Although this blog will be shut down of course, along with all the others…
An fairly informative article ( with numerous links) drawing comparisons between Argentina and Chicago for anyone who wants it
http://www.zcommunications.org/znet/viewArticle/19897